Introduction

The vision, mission and objectives of the PRF focus, inter alia, on the promotion of local production of protein to satisfy the growing demand for animal production. Based on that, projections are determined regularly to indicate future protein requirements for animal consumption.

If those figures are known, one can calculate the required increase rate of local protein production to satisfy certain set objectives. This means that progress of the PRF's various actions can be measured. For purposes of this exercise, the focus is on plant protein only, more specifically, oilcake.

The actual oilcake consumption, shown in the AFMA 2010/2011 Annual Report, was used as basis for projections for 2015, 2020 and 2025. The AFMA Annual Report does not show oilcake consumption according to animal species. As such, the APR model was used, as in the past, to divide oilcake consumption in the basis year according to animal species. These calculations are essential elements of the projections, because the future demand for oilcake, for animal consumption, must be determined based on the future demand for animal products such as meat, dairy, etc within a growing population.

The Nieuwoudt/McGuigan model is used to, given the future human demand for animal products, determine the projections for future oilcake demand.

Other variables that are important for the projections, are estimates relating to population growth according to race. In this regard, a distinction is made between the urban and rural black population. Expected growth of income is also shown per race and provided according to low and high income growth scenarios. This distinction includes a differentiator in terms of urban and rural black populations. Another variable that is taken into account, is the income elasticity of various animal products per population group. Protection tariffs that apply to different animal products are fed into the model. Population growth and income growth figures are obtained from BMR Unisa.

Table 1

Total oilcake consumption per animal species for 2010/2011

Sunflowers

Groundnuts

Soybeans

Cotton

Canola

Lupins

Other

Total

Species

Tonnes

Tonnes

Tonnes

Tonnes

Tonnes

Tonnes

Tonnes

Tonnes

Broilers

0

0

530 545

0

0

0

0

530 545

Broiler breeding hens

13 375

0

111 466

0

0

0

0

124 841

Laying hens

4 622

0

233 118

0

0

0

0

237 740

Sheep

9 901

0

0

312

0

0

0

10 213

Cattle

171 550

0

48 478

133 355

0

0

17 335

370 718

Pigs

2 954

0

190 138

0

14 273

5 142

0

212 507

Dairy

116 645

0

85 932

0

0

11 741

17 335

231 653

Ostriches

3 989

0

18 598

2 535

8 552

0

0

33 674

Horses

7 019

0

6 183

1 580

0

710

0

15 492

Aquaculture

0

0

664

0

0

0

0

664

Pets

22 991

0

65 946

0

0

407

0

89 344

Total

353 046

0

1 291 068

137 782

22 825

18 000

34 670

1 857 391

Note: Information from AFMA 2010/2011 Annual Report. Allocation per animal species according to APR model.

Projected oilcake demand

Projections are based on 2010/2011 as base year. The oilcake consumption in the base year is the actual consumption figures obtained from the AFMA Annual Report for the period 1 April 2010 to 31 March 2011. The total oilcake consumption in the said period was 1 857 391 tonnes. It is essential to mention that oilcake consumption includes full fat products inverted into oilcake.

The projections for 2015, 2020 and 2025 are based on four scenarios:

High income growth maintaining protective tariffs.

High income growth phasing out protective tariffs.

Low income growth maintaining protective tariffs.

Low income growth phasing out protective tariffs.

Table 2

Income growth

Asian

Urban Black

Rural Black

Coloured

White

Low %

2.2

1.7

-0.6

1.4

2.4

High %

4.0

3.4

0.0

1.9

3.9

In terms of previous projections, the income growth percentages changed marginally. Income growth figures for the Asian and rural black population remained unchanged. Income growth figures for the other population groups were adjusted marginally lower.

Table 3

Projected population growth per year from 2010

Asian

Urban Black

Rural Black

Coloured

White

Black

Total population and growth

Base year

Total and growth (%) per year

2010

1 274 867

24 123 765

16 082 510

4 539 790

4 565 825

40 206 275

50 586 757

2015
%

1 288 647
0.22

24 788 475
0.55

16 525 650
0.55

4 654 012
0.5

4 508 351
-0.21

41 314 126
0.55

51 765 136
0.46

2020
%

1 294 133
0.15

25 487 488
0.55

16 991 659
0.55

4 735 700
0.42

4 424 824
-0.31

42 479 147
0.55

52 933 804
0.45

2025
%

1 298 110
0.12

26 209 574
0.55

17 473 049
0.55

4 811 237
0.39

4 336 422
-0.34

43 682 623
0.55

54 128 391
0.45

The latest population figures are available from UNISA, but due to costs constraints, it is not obtainable and the latest population statistics were used. Compared to the previous projection report, the projected population growth figures for all population groups, except whites, are higher.

Table 4

Projected oilcake demand for 2015, 2020 and 2025 relating to four (4) different scenarios ¹

Oilcake supply and demand

Further calculations are based on the projected figures of scenario 1. The income growth figures per category of population indicated as high, are not beyond the growth rates expected for the medium- to long-term. Protective tariffs on imported livestock products are still in place and remained more or less the same over the past period of about 17 years. There are no indications that this will change substantially within the foreseeable future.

In addition, local production of oilcake will be compared to local consumption, as well as future projected oilcake demand. In the 2010/2011 base year, the total oilcake consumption was, according to Table 4, 1 857 391 tonnes and local oilcake production was 624 912 tonnes, comprising 33,6% of total consumption. Table 5 shows local oilcake production expressed as a percentage of total consumption for the past four seasons.

Table 5

Local oilcake production as percentage of total consumption

Local oilcake production

Total oilcake consumption

Percentage of total consumption

Period

Tonnes

Tonnes

%

2007/2008

494 557

1 758 185

28.1

2008/2009

565 181

1 664 916

33.9

2009/2010

701 030

1 743 137

40.2

2010/2011

624 912

1 857 391

33.6

Average

596 420

1 755 907

34.0

To mitigate the effects of, inter alia, variation in climate, on production and price ratios on short-term production decisions, the average figures for four seasons are used to express local production in terms of total consumption. Table 5 clearly illustrates the large gap between total consumption of oilcake and local oilcake production.

Rates at which local oilcake production must increase to provide for the projected consumption demand

An important PRF objective is, to replace imported oilcake by locally produced oilcake, through the implementation of its actions. That is why it is important to know at which annual rates local oilcake production must increase to reduce the gap between local production and projected consumption. Lastly, it is possible to determine the percentage of locally produced oilcake relating to projected consumption in 2015, 2020 and 2025, if local production were to grow at the historical annual growth rate (see table 9).

Table 6

Percentage growth required for annual local oilcake production to achieve certain targets in terms of projected consumption in 2015

Projected consumption 2015

Required growth rate of local production per annum from 596 420

Oilcake quantity

Percentage of projected consumption

Tonnes

%

Tonnes

%

2 127 336

3.9

723 294

34

2 127 336

12.3

1 063 668

50

2 127 336

23.3

1 701 868

80

2 127 336

28.9

2 127 336

100

Local growth at historic rate

2 127 336

5.16

767 017

36.0

Table 7

Percentage growth required for local oilcake production to achieve certain targets in terms of projected consumption in 2020

Projected consumption 2020

Required growth rate of local production per annum from 596 420

Oilcake quantity

Percentage of projected consumption

Tonnes

%

Tonnes

%

2 429 057

3.3

825 879

34

2 429 057

7.4

1 214 528

50

2 429 057

12.5

1 943 246

80

2 429 057

15.1

2 429 057

100

Local growth at historic rate

2 429 057

5.16

1 268 560

46.7

Table 8

Percentage growth required for local oilcake production to achieve certain targets in terms of projected consumption in 2025

Oilcake consumption, production and imports

Figure 2

Areas and production of protein commodities

A few remarks and conclusions

The credibility of projections is usually questioned, because the outcomes of the model are as good or bad as the assumptions and empirical data used. An independent study by BFAP estimates that the soy oilcake consumption in 2020 will be 1 818 200 tonnes. This is according to the scenario that the PRF found most acceptable. Currently the inclusion level of soy oilcake and full fat soy (the latter as oilcake equivalent) is 70% of the total oilcake consumption in die base year. If this applies to the BFAP projection of 1 818 200 tonnes soy oilcake, it would result in a slight over-estimate of the total oilcake consumption estimated according to the PRF projections. However, the trend is that the level of inclusion of soy oilcake in the total oilcake consumption increased over time and if the inclusion level were 75% soy oilcake by 2020, then the BFAP projection is almost 100% equal to the PRF estimates. This means that there are good reasons to assume that the estimates generated in these PRF models are realistic.

Table 5 clearly shows the significant gap between locally produced oilcake and total consumption. At the growth rate of local oilcake production to date, it will not be possible to provide in 50% of the local demand by 2015, 2020 and 2025. The historical growth rate refers to the annual growth rate of oilcake production over the past 14 years (see Table 9).

If the increased rate of the past few years, in terms of soy production were sustainable, the situation would change totally. The annual growth rate for soy production (in tonnes) over the past 14 years was 23,71% per year. This was mainly due to large expansion of areas planted since 2008/2009.

The fact that the growth in area planted every year, for soybeans and canola is 15,19% and 9,61%, compared to the annual respective average yield growth of 23,21% and 17,06% indicate technological progress, which is important for the economy of a crop.

Given the assumption that soy oilcake will comprise 75% of the total oilcake from 2015, it implies that 1 595 502 tonnes soy oilcake will be required in 2015. Translated into soybeans it means that 1 994 378 tonnes soybeans will be required to provide for the consumer demand. This does not include soybeans for human consumption, nor exports that may take effect. For 2020 the demand for soy oilcake will be 1 821 793 tonnes, or 2 277 241 tonnes soybeans. In 2025 the respective requirements will be 2 038 864 tonnes and 2 548 580 tonnes.

From Table 4, it is clear that protective tariffs on the import of live stock products for human consumption will be the single most important factor affecting the demand for protein for animal consumption. A reduction in the protective tariffs will decrease the protein demand for animal consumption and vice versa, with a negative effect on employment opportunities and loss of foreign exchange.

Given the projections and current backlog, as well as aspects such as foreign exchange, employment opportunities, etc all involved in the canola and particularly the soybean industry, will have to effect renewed attempts to show more progress.